[clue-talk] Fwd: [clue-tech] Was: ... Giveaway

[Nate Duehr]

Richard Knechtel wrote:
> Here in Wisconsin we have three stations that are below $2.00 a gallon.
> 
> Caught on TAPE admission by JP Morgan Executive that they don't plan 
> using the $ BIllions they recieved to use for lending - only for their 
> OWN financial gain thorugh more buyouts!
> 
> The Bailout Lie Exposed: Financial "Big Boys" Never Intended To Lend Out 
> Their Windfall
> http://www.infowars.com/?p=5606
> 
> Bailout: It's all part of the New International Economic Order
> http://www.infowars.com/?p=4774

Well, duh.  You can't "force" anyone to loan money out that you hand 
them.   (Well they COULD have put that requirement on the money, but 
they didn't... if they really wanted banks to lend, they SHOULD have.)

That's the underlying principal here.  Many of the banks have already 
stated weeks ago that they'd rather use the money to buy out other banks 
than to lend it out using the same bad practices they had before for 
managing their leverage/debt.  This isn't a surprise.

The banks are basically saying that their balance sheets scare the crap 
out of their management, and that they WANT to change their ways and be 
more fiscally conservative, holding on to more deposits and money in 
reserver -- meanwhile the government is telling them "lend! lend!"...

That won't work itself out for a while.

(And it says something about the depth of the problem on their internal 
books when they didn't immediately put that capital to work.)

There's also a fundamental problem here.  Forcing money down a BAD 
bank's throat at gun-point when that bank had inappropriate lending 
practices and needs to shore up their internal (non-transparent) portion 
of their balance books, isn't fixing the problem.

Handing that bad bank to another good bank MIGHT be better.

Letting that bank FAIL is true Capitalism, but...

The Catch-22 is... the public doesn't LIKE this.  They want no turmoil, 
no pain, a mommy/daddy figure (in the form of government) to make the 
volatility and uncertainty go away.

Basically, when Banks fail, unlike almost any other business -- people 
panic.  Whereas the truth is, there was protection for them -- FDIC 
steps in... their money is sound, and the bad bank GOES AWAY FOREVER.

That's not a bad thing.  But the Fed is trying to tip-toe and "manage" 
consumer panic.

Joe the Plumber (ha!  had to use it!) doesn't get why a bank fails, he 
just wants his money out of ALL banks, right now.

The Fed's rate cut today gives a bit more incentive, but it also slashed 
the value of the U.S. dollar on the currency markets.  There will be 
unintended consequences from that.  Not sure it leads (yet) to 
inflation, but that's "next" in our normal 7 year boom/bust cycle.

The only thing that "fixes" this whole thing is time and 
investor/consumer confidence.  That doesn't happen in a normal 7 year 
recession cycle, when unemployment is growing.

All the Fed's action today will REALLY do, until people start seriously 
evaluating stocks and investments against the REAL numbers underneath 
them, is add another big wave of volatility.

(While the VIX index is lower today on buying/upside driven by the rate 
cut, it's still INSANELY volatile in the stock market right now.  This 
is completely NORMAL for a market that's still poking around deciding if 
Dow 7800 is really the "bottom".  http://finance.yahoo.com/q?s=^vix )

Also it will help quite a bit after the market factors in that in SOME 
areas of the country, people are going to slowly come to the realization 
that their houses weren't worth those exorbitantly high numbers they 
paid for them -- and that sooner or later, they're probably going to 
HAVE to move, and take the loss.  Banks are going to have to decide if 
they'll accept the short-sales in many cases.  That hasn't (and won't) 
finished working it's way through the system for years.

Right now people are hunkered down in the houses in the bad markets, 
thinking the market will come back quickly, but it won't.  It'll start 
upward sometime around July of next year, I think... but SLOWLY.  Many 
people will have to move and will not get to wait long enough to see it 
grow past their loss-stop number.

Once they have $10-$50 of debt hanging over their heads because they HAD 
to move to follow a job, or whatever... then we'll see how the overall 
picture is.  It won't be pretty for a while.

There's also still the spectre of ENORMOUS amounts of consumer debt 
(translation: credit cards) out there... even with ALL that has 
happened, the market hasn't reasoned its way out of that corner yet. 
And there are a lot of people who either a) have it, or b) rolled it 
into HELOC or regular home-equity loans in a down housing market.

I'm bullish about a few things in this market, but not overall.  This is 
still a bear market overall, and it's still a recession that's just started.

Can someone smart still make money?  Sure.  I traded AAPL from $93.5 to 
$103.5 a share.  Great company, great balance sheet, I bought an iPhone 
in down economic times... and I hate spending money... so... it was a 
no-brainer.

Here come the GDP numbers... watch for falling stock prices tomorrow...

<http://www.reuters.com/article/marketsNews/idINN2855952120081028?rpc=44>

People just need to be patient and look for value.  It's also a great 
time to HAMMER on your company HR department if the options available 
inside your 401K super-duper-suck.

Nate